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T-Mobile USA has announced a $70 unlimited data plan, but in reality the plan has a lot of limits. And T-Mobile said it will stop offering cheaper plans to new customers.

The $70 unlimited "T-Mobile One" plan caps hotspot usage to 2G speeds, which T-Mobile defines as up to 128kbps. Normal-speed mobile hotspot usage will cost $15 for each 5GB allotment.

The new unlimited plan also throttles video to 480p, similar to the carrier's Binge On promotion that throttles video and exempts it from data caps. On the new unlimited plan, customers who want HD video must pay an extra $25 a month per line. The unlimited plan also throttles customers who use more than 26GB a month if they are connected to a congested cell tower.

Further Reading

Despite all these limits, T-Mobile CEO John Legere boasted that "Verizon and AT&T could never do this because their outdated and overcrowded networks flat-out cannot handle it."

T-Mobile said the $70 plan will be "replacing all our rate plans," including its cheaper plans that cost $50 or $65 a month. T-Mobile said it intends to "eliminate the data plan," but customers will pay more to get unlimited data that throttles hotspot and video speeds.

T-Mobile One will be available to postpaid customers on September 6 and to prepaid customers on a yet-to-be-announced date. While the first line costs $70, a second line costs $50, with the third through eighth lines costing $20 each. A 9th line or anything after that would cost $30 per month. Prices are $5 higher for customers who don't enable automatic payments.

Tablets can be added for $20 a month, or a tablet can be your only unlimited line at $70 a month. Smartwatches or other wearables can be added for $5 a month but are limited to 2G speeds.

Should you switch?

Currently, T-Mobile's $50 plan comes with 2GB, and its $65 plan comes with 6GB. Existing customers can keep their plans, and they may want to think hard before switching to T-Mobile One.

Say you have the $65, 6GB plan. You could switch and get unlimited data for just $5 extra a month. But today, you can use your smartphone's mobile hotspot at normal speeds without paying extra, a benefit you'd lose by moving to unlimited data. Your current plan also lets you disable the Binge On throttling and watch videos in HD without paying extra. If you go over your data cap, you're throttled for the rest of the month, but you also have rollover data that might let you stay connected at high speeds without paying more.

Now, let's say you have T-Mobile's already-existing unlimited plan, which costs $95 per month. You'd save $25 a month by switching to the new unlimited plan and accepting the video quality limits. But if you really want high-definition video you'd need to pay an extra $25 anyway, making the plan cost $95 again. But even then, it's a worse deal because today's $95 unlimited plan includes 14GB of high-speed mobile hotspot. With T-Mobile One unlimited, you'd pay another $45 a month to get that much fast hotspot usage, as it's $15 for each 5GB hotspot allotment.

T-Mobile told Ars that the hotspot charge is "$15 per month," so it sounds like you can't roll over any leftover hotspot data if you use less than 5GB in a month.

Sprint offers unlimited data with limits on video, music, and gaming

Sprint already offers an unlimited plan for $75 and tomorrow will start selling a $60 unlimited plan that has some new limits. The Sprint "Unlimited Freedom" plan will "optimize" streaming video, gaming, and music, meaning it will be throttled to use less data. Customers will get "Unlimited nationwide 4G LTE data for most everything else," Sprint said. A second line is $40 a month, while additional lines are $30 each.

"Unlimited Freedom utilizes optimization for streaming video, gaming and music, delivering a high-quality viewing experience for mobile devices with video streams of up to 480p resolution, gaming up to 2Mbps and music streams at extreme quality of up to 500kbps," Sprint said.

Sprint CEO Marcelo Claure said he "initially questioned" the bandwidth limits but that "the decision was simpler when consumers said it was ‘practically indistinguishable’ in our tests... In fact, most individuals we showed could not see any difference between optimized and premium-resolution streaming videos when viewing on mobile phone screens."

Sprint's announcement did not mention any hotspot capabilities for its $60 unlimited plan. The $75 unlimited plan comes with 3GB of high-speed hotspot usage and a throttled hotspot after 3GB. We've asked Sprint about mobile hotspots for the new plan but haven't heard back.

UPDATE: The Sprint plan includes 5GB a month of high-speed mobile hotspot, VPN, and P2P use, with unlimited data at 2G speeds after that.

Promoted Comments

The forced 480p video is all right (not great), but those tethering limitations are not good. This seems like a way to boost T-Mobile's profits while sounding like a good guy, but if you read between the lines you see that T-Mobile is starting their slow decent into being just like every other carrier.

Which is too bad, because I've loved T-Mo so far.

In the 20 or so years I've had a cell phone, every time the "new plans!" are released, they're always worse deals with worse restrictions while the company claims it's better for the customer. I'd give T-Mobile a pass here if they kept the 6gig plan and dropped the price $10-15/month, but no, new customers are stuck with crappy restrictions and crappy limitations to their "unlimited" data. In a few years, T-Mobile will force existing users onto the "unlimited" plan, and I'll have to switch carriers yet again.

The only exception is when unlimited texting became universal on all plans, because charging per text was criminal.